Finding Light in the Darkness

Tag Archives: US Budget Surplus

On Friday, Vice President Joe Biden called for Republican and Democratic governors to lead the nation out of the mess that has crippled Washington and insist that Congress approve billions of dollars to repair the country’s aging infrastructure. The Associate Press reports (Vice President Joe Biden calls on governors to lead nation), during a meeting of the National Governors Association, Biden explained: “The way things have gotten today, and I’m not singling out any party or any group of people – the politics, the culture in Washington, it’s become too personal, it’s too corrosive. I think you’ve got to lead us out of this mess we’re in.” The three day conference held this year in Nashville gathers state leaders from both parties to collaborate despite partisan differences on immigration, health care and education. Even with the bipartisan tone, many governors face midterm election in a season where the balance of power in the statehouses could potentially be decided and ending some presidential campaigns before they begin. Biden, a potential presidential contender himself, said the political climate in Washington was less divisive when he began serving in the Senate three decades ago at a time when white segregationists served openly in Congress. In addition, he said Republicans and Democrats have long agreed on the need to reinvest in the nation’s infrastructure and workforce development, however the current climate even with needed spending has been bogged down by politics. The main concern for governors right now is the deadline for Congress to pay for the federal Highway Trust Fund that allows states to maintain their transportation infrastructure. While a short term bill will most likely pass in Congress, governors want a long term plan. Unfortunately, many governors are reluctant to give any suggestion on how to fund their infrastructure in the long term. As for right now, fuel taxes are the main revenue source, but they have not been raised in 21 years and aren’t keeping pace with spending. In addition, the bipartisan Senate proposal to increase the federal gas tax has failed. It is hard to say whether infrastructure issues will play a role in the coming elections, although Washington’s struggles with what was long a bipartisan issues is emblematic of voters’ overall view of Congress, which as the Associate Press puts it is at an all time low.

Meanwhile back in Washington, the Treasury Department on Friday said the June surplus totaled $71 billion, following a $130 billion deficit in May, putting it on course to record the lowest annual deficit since 2008. The Associate Press reports that the government also ran a surplus in June 2013 due in part to dividends from Fannie Mae, the mortgage giant under federal conservatorship for the past six years. For the first nine months of this budget year, the deficit totals $366 billion, down 28 percent from the same period last year 2013, while tax receipts are up 8 percent compared to the prior year and spending increased 1 percent. The Congressional Budget Office is forecasting a deficit of $492 billion for the full budget year ending Sept. 30.

While strides are being made to cut the deficit, Congress still struggles to get their act together. On Friday, as Michael McAuliff reports, House Votes For Tax Breaks To Add $287 Billion More To Deficit, the GOP led House of Representatives voted to make a former stimulus measure permanent along with another related tax cut adding $287 billion to the deficit over the next 10 year. The largest part worth $263 billion is making permanent so called bonus depreciation which allows businesses to write off the cost of capital investments and improvements much quicker. The stimulus was used twice during the Bush Administration and expired last year. The idea is that if lawmakers give businesses a break during tough times then they will speed up major equipment purchases and stimulate the economy. Those who support it believe it would allow business to plan their investments, while opponents mock the idea stating that the Congressional Research Service reports found the break to be a weak stimulus and the stimulus effect will likely fall further if it becomes permanent. According to Rep. Lloyd Doggett (D-Texas), a member of the Ways and Means Committee: “Even as a stimulus, the analysis shows that for every dollar that is invested we get 20 cents of growth. A fellow could go bankrupt with that kind of economics, and that’s exactly what they would have the country doing and not meeting its other needs while funding something that doesn’t work.” In addition, Rep. Ron Kind (D-Wis.) added: “Yesterday, the Ways and Means Committee was working on a markup of legislation for another short-term extension of the highway trust fund — you know, the transportation infrastructure investment we desperately need in this country. We were scratching and clawing to try to find an additional $10 billion over the next 10 months to try to keep some of these projects moving forward, and yet here today, we have another permanent change to the tax code at a cost of $287 billion over the next 10 years and not a nickel of it paid for.” Kind noted that his committee passed 14 permanent tax cut bills at a cost of $900 billion. Unfortunately, Friday’s full house vote allowed for two thirds of the committee’s cuts to pass. Rep. Pat Tiberi (R-Ohio), the sponsor of the cuts, said that bonus depreciation has been going on since 2002 off and on without being paid for, so it might as well be permanent. He added, “Bad policy. Even though we are giving for the first time certainty, predictability to people who actually create jobs in America, who must have a business plan and must make those big purchases. Amazing.” The White House has threatened to veto the bill along with permanent cuts and additionally the Senate will weight the cuts, but only plan for short term extensions.

While Congress and the White House try to find common ground, three of the world’s richest men are calling for Congress to pass legislation to overhaul the immigration system and provide a path to citizenship for undocumented immigrants. Igor Bobic article, Sheldon Adelson, Warren Buffett, And Bill Gates Chastise House GOP On Immigration, explains the Casino magnate and conservative donor Sheldon Adselson along with Berkshire Hathaway CEO Warren Buffett and former Microsoft CEO Bill Gates criticized the House Republicans for their failure to address the current policy. In a New York Times op-ed piece published Thursday, they wrote: “Whatever the precise provisions of a law, it’s time for the House to draft and pass a bill that reflects both our country’s humanity and its self-interest.” However, the chance of any immigration reform bill moving through the House is unlikely with the unwillingness of conservative members and Speaker John Boehner to bring to the floor without overwhelming support from his caucus. Despite the obstacles, Bobic reports the three men are unphased urging Republicans to listen to reason. They added: “A Congress that does nothing about these problems is extending an irrational policy by default; that is, if lawmakers don’t act to change it, it stays the way it is, irrational. The current stalemate — in which greater pride is attached to thwarting the opposition than to advancing the nation’s interests — is depressing to most Americans and virtually all of its business managers. The impasse certainly depresses the three of us…Signs of a more productive attitude in Washington — which passage of a well-designed immigration bill would provide — might well lift spirits and thereby stimulate the economy. It’s time for 535 of America’s citizens to remember what they owe to the 318 million who employ them.”